A Case Study on Marks and Spencer
The Company at Present
Marks and Spencer has over 450 stores located throughout the UK, this includes the largest store at Marble Arch, London.
In addition, the Company has 150 stores worldwide, including over 130 franchise businesses, operating in 30 countries.
Background of the Company
- Marks and Spencer (M&S) of Britain (often referred to as Marks & Sparks by locals) is a general retailer that sells clothes, gifts, home furnishings, and foods under the St. Michael trademark in the UK, Europe, the Americas and Far East.
- The company also operates financial services segment, which accounted for about 3% of the company's 1998 profits (Dow Jones Industrial 1999)
- Marks & Spencer started as a stall in 1884 by Michael Marks in the Leads market using an L5 loan from a wholesaler
- Its philosophy is to sell durable merchandise at a moderate price. It has merchandise made to its specifications.
- By 1901, the company acquired 35 Outlets as well as a new partner, Tom Spencer
- By 1949 all the company's stores carried mostly private label (St. Michael) products produced by British suppliers (De Nardi-Cole 1998).
Case Background
- Britain has often been called a country of shopkeepers, and Marks & Spencer (M&S) is undoubtedly the shop keeping leader
- With nearly 300 stores in the United Kingdom, M&S is the country's largest retailer : it holds 17 percent of the UK clothing market
- Its marble arch store in London is in the Guinness Book of World Records as the store that takes in more revenue per square foot than any other in the world
- Soft goods (clothes and household textiles) account for about 58 percent of the company's sales and food lines account for about 42 percent
- The goods are perceived as having excellent value, quality, so there is a little need to discount prices for sales
- Because M & S is so well known, it spends little on advertising, decorates its stores austerely, offers very little personal service and provides no dressing rooms or public bathrooms
- M & S has been successful in appealing to the nationalism of its British clientele by promoting heavily the fact that nearly all the clothing it sells originates in the United Kingdom
- But the company admits that the percentage has slipped to about four-fifths and will likely fall further as its British suppliers move more of their production abroad
- Being so already dominant, M&S would have to add new products or appeal to new market segments to maintain its growth rate
- Its attempt to move into higher-priced clothing into a more fashion-conscious market has not been very successful
Problem
How would Marks and Spencer become successful in the international arena?
Statement of Objective
- Being so dominant in the United Kingdom, M&S would appeal to new market segments
- To be successful not only in the United Kingdom but also overseas
SWOT Analysis
Strengths
- M&S were renowned for their attention to detail in terms of supplier control, merchandise and store layout
- The success of M&S under Simon Marks was often attributed his understanding of customer preferences and trends
- Provide highest standards of quality
- Suppliers use the most modern and efficient production techniques
Weaknesses
- Stocked generic clothing range with wide appeal to the public: buyers often had to make choices, which would outlast the fashion and trends seen in other high street retailers
- This lagging behind in case of introducing up-to-dated fashionable clothing to keep pace with the environment actually made them vulnerable to their competitors
- They always used British suppliers believing that it would give them highest quality with low costs but actually sometimes made them weak to challenge its competitors
- Some competitors are using overseas suppliers to keep the costs down
Opportunities
To survive in today's world globalization is important. M&S have a wide opportunity to go more global to improve and expand its business.
They also have the opportunity to consider more overseas supplier which will actually give them cost advantage, rather than suppliers available on a local level.
They also have the opportunity to maximize the use of available technology to improve their functioning and to gain competitive advantage.
Threats
They are in strong competition with Gap, Oasis and Next, who are offering similarly priced products yet more fashionable.
M&S is also in competition from discount stores like Matalan, and “George” range at Asda.
M&S is also in threat from Tesco and Seinsbury's who moved into offering added value foods, which had been pioneered by M&S.
Alternative Courses Of Action
1. Substantial research before operations and correct interpretation of the information derived from the research.
Advantages
To identify the target market segment
To identify the demand
To identify the particular products needed in the market
To identify the necessary promotional needs
To identify the process of distribution of the goods
Disadvantages
The company will spend much for the research
Research takes time
Research may not always be reliable as there might have sudden changes in the environment
2. Ability of the company to adjust with the new environment.
Advantages
Flexibility of the business to cater more market and demand, thus more sales and profit
Disadvantages
To be flexible is sometimes costly for the company as it will adjust to the environment
3. Substantial research before operations and correct interpretation of the information derived from the research. Then, when it's already operational, adjust with the new environment.
Advantages
Flexibility of the business to cater more market and demand, thus more sales and profit
To identify the target market segment
To identify the demand
To identify the particular products needed in the market
To identify the necessary promotional needs
To identify the process of distribution of the goods
Disadvantages
To be flexible is sometimes costly for the company as it will adjust to the environment
The company will spend much for the research
Research takes time
Research may not always be reliable as there might have sudden changes in the environment
Recommendation
Substantial research before operations and correct interpretation of the information derived from the research. Then, when it's already operational, adjust with the new environment.
Conclusion
The M&S case points out the problems that a company may face internationally. Despite a substantial research before beginning international operations, M&S still faced unexpected problems that inhibited rapid sales growth.
Domestic and international marketing principles are the same however, environmental differences often cause managers either to overlook important variables to misinterpret information.
M&S made mistakes regarding important marketing variables such as the target market segment, the merchandise mix, promotional needs, the degree to which products would need to be altered for the markets, and distributional differences.
However, M&S has altered operations based on its experience and is now doing well in most of the foreign locations in which it operates.
